Sri Lanka's stock market fell more than 4.5 percent in early trade on Tuesday, breaking through the psychological 5,000-point barrier, as margin calls mounted and the rupee hit a record low.

The main share index fell 4.57 percent or 237.54 points weaker at 4,962.44 in early trade, before recovering slightly to 5,012.78 points by 0843 GMT.

The benchmark appeared poised for its ninth consecutive losing session after losing more than 4 percent at one point on Monday as investors worried about the impact of a fuel price hike of at least 37 percent on Saturday.

Sri Lanka's rupee fell 2.36 percent on Tuesday to an all-time low of 120.35 after the central bank stopped intervention in the market.

The currency has weakened 5.4 percent in the last three sessions after the central bank changed its intervention method to a quantity, instead of defending a particular level of the currency against U.S. dollar, after spending more than $2.7 billion to defend the currency since July.

The main All Share Price Index closed down 3.35 percent (173.94 points) at 5,026.04, while the Milanka index fell 3.33 percent (150.49 points) to close at 4,373.68.